Today's Headlines 2 July 2014

Astra Keep Expansive in 2H14 (ID)  Amid the weakening rupiah, ASII continued its business expansion in infrastructure, automotive, agribusiness, and heavy equipment. During 1H14, the company has absorbed capex by 40% of the total budget this year of Rp20tn. For this year, ASII seeks to maintain its 4W market share in the range of 50-53% with sales of 1.2-1.3mn units. As for 2W, the company targets about 65% market share with sales of 8mn units.  BRI maintain acquisition fund Rp3 T (ID)  BBRI is conducting due diligence on purchase shares of PT Bank Mutiara Tbk as well exploring the acquisition of two insurance companies. Although such corporate action is expected to be completed this year, BBRI claims will not revise the fund allocated for the company's inorganic growth Rp3 trillion.  SMGR to Refinance Vietnamese Unit Debts (TJP)  SMGR had signed an affiliated agreement with Tang Long Cement (TLCC) to refinance its US$140mn debts, in a bid to strengthen TLCC’s financial ability to restructure its debts. The agreement will be valid for six years with the price/ton purchased to be decided later during transactions. TLCC has to pay US$7mn in every three months for five years to pay off all its debts. Thus, to generate that cash flow, TLCC has to export 140k tons of cement during the period of time. SMGR would purchase and resell of the TLCC’s products if the company fell short of its quarterly export target.  Timah withhold tins sale for July to strategize for higher prices (TJP)  PT Timah Tbk (TINS) consider to temporarily stop selling tin for a few weeks in July unless tin prices reached at least US$ 23,000 per ton while still continuing the production process. Corporate secretary said this step taken as they expect the selling price will be boosted due to low supply of tin from Indonesia as world's biggest tin shipper and the company orienting toward profits rather than sales quantity. TINS’s 1Q14 net profit and revenue both dropped by 25% and 14% y-o-y, respectively.  Comment: Although the withholding of refined tin sales volume for few weeks may result on lower-than-expected on the refined tin sales volume in 3Q14 and rising inventory level, with the company’s strategy to focus on the selling price instead of the sales quantity, we expect the company to sustain its profitability and margin. As the company withheld the refined tin sales volume in Jan 14 as the price reached the lowest of US$21,500/ton in that month, the refined tin inventory level jumped to 4,371 tons in 1Q14 vs. 3,045 tons at end 4Q13. However, with the expectation of steady tin price in 2Q14, we expect the company to sell higher refined tin in 2Q14 than in 1Q14. (Stefanus)  XL Axiata Will Soon Sell Their Towers (BI)  After more than 5 years of plan to sell their towers, EXCL finally held an open auction on the sale of their telecommunications towers in the second half of this year. In addition to divesting their towers, following the acquisition of Axis, XL Axiata also plans to sell the Axis’ tower. Axis currently has about 3,000 towers. The proceeds from the sale of the tower will be used to repay some of its debts. Until now, there has been no explanation about the number of towers that will be sell following the previously planned to release 7000 tower.

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